Government: Influencers and celebrities endorsing products must reveal “material” interests

When promoting a product on social media, the government has made it a requirement that social media influencers disclose material interests like gifts, hotel stays, equity, discounts, and rewards. Under the new rules, endorsements must be stated in clear, simple language. Terms like “advertisement,” “sponsored,” and “paid promotion” can be used.

On Friday, Consumer Affairs Secretary Rohit Kumar Singh told reporters that violations could result in severe legal action, including a prohibition on endorsements.

The government has also issued a new set of guidelines titled “Endorsement Know-Hows” for celebrities, influencers, and virtual media influencers (Avatars or computer-generated characters) on social media platforms.

The government stated that the restrictions apply to celebrities, social media influencers, and virtual influencers. According to the guidelines, material benefits include monetary or other compensation, free products with or without conditions, including those received unsolicited, contest and sweepstakes entries, trips or hotel stays, media bartering, coverage, and awards, as well as personal or employment relationships.

It also told the celebrities and influencers to make sure that the marketer could back up the claims made in the ads. “It is also recommended that the endorser has actually utilized or experienced the product or service,” the standards state.

Singh stated that the rules were established in accordance with the consumer protection statute, which prohibits unfair business practices and deceptive advertising. In the event of a breach, the Central Consumer Protection Authority (CCPA) can impose a fine of up to 10 lakh rupees, increasing to 50 lakh rupees for repeated offences. The authorities may also prohibit the endorser for one to three years.

Nidhi Khare, chief commissioner of the CCPA, added that “any form, manner, or medium of deceptive advertising is forbidden by law.” Khare said that the new standard will require people who have access to an audience and can influence their buying decisions to tell the audience about the material link.

The market for social media influencers in India is expected to reach Rs 2,800 crore by 2025, according to Singh, who said that the country is home to more than one million influential social media users. He did say, though, that they had to act right and follow the idea of “full disclosure.”

Singh stated that consumers should be aware that if something is thrown at them through digital media, the person or entity sponsoring it has taken money from them or has some other link to the business. According to the rules, the disclosure should be presented in a way that makes it “impossible to ignore” and should be written in simple language. Disclosures are incompatible with a collection of hashtags or links.

Disclosures should be put on top of visual endorsements, for example, so that viewers can see them. In the case of videos, disclosures should be included inside the video itself, as well as in audio and video formats. Disclosures should be displayed consistently and clearly during the duration of a live webcast.